Mr Market has found a new home in Beijing. Benjamin Graham’s allegory, which describes an irrational investor led by their emotions, explains the uneven shareholder response to China’s relentless regulatory crackdowns.
The looming break-up of financial app Alipay is the latest example of government meddling. It has repercussions for Jack Ma’s larger Alibaba Group, whose share price fell 4 per cent on Monday. China’s tech stocks have performed poorly all year, tempting foreign investors to sell out of everything. Graham would rightly demand more analysis before giving up.
Government intervention, however obliquely delivered, is nothing new for China investors. In the past decade, China has instigated seven regulatory initiatives. These have not only affected internet companies but also the education, pharmaceutical and basic materials sectors. They have lasted months, or even years.